Consumers just won a big victory in protecting their legal rights against big corporations.
The Consumer Financial Protection Bureau – the federal government’s watchdog for consumer interests – earlier this month finalized a new rule in favor of customers of banks and other financial companies. The rule forbids these corporations from putting forced arbitration clauses in their new customer contracts.
Forced arbitration is exactly what it sounds like. It prohibits customers from taking their disputes to court through class action lawsuits, and directs all such claims to third-party arbitrators who hear the complaints behind closed doors and render a decision.
Forced Arbitration Bad for Customers
So what’s wrong with forced arbitration clauses in contracts with banks and other finance companies?
Such clauses are usually tilted in favor of the company. Often companies decide which arbitrator will hear a dispute, with no customer input. The chosen arbitrator may have a long and friendly history with the company.
Unlike the nation’s court system, customers cannot appeal decisions that go against them. The arbitrator is final judge and jury, leaving no other options for wronged customers.
And the very nature of “forced” arbitration simply is unfair. While some customers may freely choose arbitration, the clause denies the right of those who would rather have their day in open court.
The new CFPB rule addresses this company power play by allowing customers the right to employ class action lawsuits in their pursuit of justice. Class actions are a vital legal right that can level the playing field in disputes between large, well-funded corporations and their customers.
Consumers Gain Leverage Through Class Action Lawsuits
Class action lawsuits can involve thousands of individuals who have been similarly harmed financially by the wrongful actions of a company. Their economic damages or financial circumstance may dissuade them from personally hiring an attorney. But when a class of people grouped together are represented by the same legal team, they enjoy much greater economies of scale and serious litigating resources.
One example is the class action lawsuit Gray Ritter Graham handled on behalf of customers of a Missouri bank who felt they were overcharged by the bank. The lawsuit ended in millions of dollars in just compensation to the customers.
If you suspect you were taken advantage of financially by a large corporation, you don’t have to go after that company alone. Take your concerns to an attorney who handles class action lawsuits to fully explore your legal options.
The choice of a lawyer is an important decision that should not be based solely on advertising.
Authored by Gray Ritter Graham, posted in Blog July 21, 2017